Mortgage Rates Drop To Lowest In Over 3 Years: 3 Mreit Stocks To Watch

Mortgage rates continue to ease, with the average 30-year fixed rate sliding to 6.01% in the week ended Feb. 19, 2026, according to the data from FreddieMac's report. This is the lowest rate since September 2022. A year ago at this time, the mortgage rates averaged 6.85%.

This lower rate environment is not only improving affordability for prospective homebuyers but is also strengthening the financial position of homeowners. Over the past year, refinance application activity has more than doubled, enabling many recent buyers to reduce their annual mortgage payments by thousands of dollars. These favorable trends create a constructive backdrop for mortgage real estate investment trust (mREIT) investors. Stocks such as Redwood Trust Inc. RWT, TPG Mortgage Investment Trust Inc. MITT and Annaly Capital Management NLY stand out as potential beneficiaries of rising origination and refinancing volumes.

Mortgage applications rose 2.8% last week as lower borrowing costs spurred a pickup in refinancing activity, according to the Mortgage Bankers Association (MBA)’s weekly mortgage applications survey for the week ending Feb. 13. Refinance applications led the gain, climbing 7% from the previous week and surging 132% from the same week a year ago.

This favorable backdrop is poised to benefit mREITs, as tighter spreads in the Agency market should lift asset prices and drive book value growth in the near term. Lower rates will also help ease operational and funding pressures, boosting gain-on-sale margins and supporting new investment activity.

As net interest spreads expand, mREITs like NLY, MITT and RWT can see stronger profitability and improved capacity to increase dividend payouts, making them especially attractive to income-focused investors.

3 mREIT Stocks to Keep an Eye On

Redwood Trust: It is a self-advised and self-managed real estate investment trust. RWT specializes in acquiring and managing real estate mortgage assets, which may be acquired as whole loans or as mortgage securities representing interests in or obligations, backed by pools of mortgage loans.

As of Dec. 31, 2025, the economic return on book value was 2.6% compared with the negative economic return on book value of 1.1% for the fourth quarter of 2025. However, its NII fell to $25. 9 million at the end of the fourth quarter of 2025 from the $27.6 million a year ago.

In recent months, RWT has taken targeted actions to simplify its operating structure and sharpen its focus on businesses generating strong and sustainable returns, positioning the platform to realize cost savings in the future.

Redwood Trust’s 2026 earnings have been unchanged at $1.28 over the past week. It indicates a year-over-year jump of 45.5%. The company has a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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TPG Mortgage Investment: The company strengthened its investment platform with an $8.5-billion portfolio by the end of 2025, supported by robust financing of $8.1 billion and strong liquidity of $108.7 million. The company increased its strategic stake in Arc Home, a residential mortgage originator, to 66 % ownership, contributing to record origination volume, with 79 % year-over-year growth and meaningful earnings contributions.

In 2025, MITT delivered strong financial results, reporting a book value of $10.48 per share and an annual economic return on equity of 6.5 % as of Dec. 31, 2025.

TPG Mortgage Investment’s 2026 earnings have been unchanged at $1.07 over the past week. It indicates a year-over-year rally of 24.4%. MITT has a Zacks Rank of #2 (Buy) at present. 

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Annaly: Its strength lies in its diversified investment strategy, spanning residential credit, mortgage servicing rights (MSRs) and Agency mortgage-backed securities (MBS). This approach helps reduce volatility and interest rate sensitivity while targeting attractive risk-adjusted returns.

As of Dec 31, 2025, NLY managed a $104.7-billion portfolio, with $92.9 billion in liquid Agency assets. The company is also expanding its MSR business, which serves as a hedge against rising rates by gaining value when prepayments slow. By balancing Agency MBS with MSRs, it enhances yield, mitigates risks and positions itself for more stable long-term performance across rate cycles.

Given relatively lower mortgage rates, in 2025, the company’s NII increased to $1.13 billion from $247.8 million in the same period a year ago. With improving purchase originations and refinancing, Annaly is positioned for book value gains as tighter Agency spreads lift asset prices. A wider net interest spread should also enhance portfolio yields, supporting stronger financial performance ahead.

The company’s 2026 earnings estimates have been unchanged at $2.96 per share over the past week, indicating year-over-year growth of 1.4%. NLY has a Zacks Rank of #3 (Hold) at present.

Earnings Estimate

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This article originally published on Zacks Investment Research (zacks.com).

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